One of the most common bounce reasons given is "550 Requested action not taken: mailbox unavailable".
The interpretation of these messages is not always straightforward. In the case of Hotmail it could mean the user's mailbox doesn't exist anymore, or that the mailbox was temporary unavailable due to a technical error. It might in some cases also mean something else, as explained in the following article:

Hotmail Has Many, Many Spamtraps

Ben Isaacson of ESPC/Experian/CheetahMail fame mentioned something very interesting at last month's Inbox/Outbox conflab. Microsoft has an interesting way of building spamtraps to catch unwary spammers and idiot direct marketers.

Hotmail accounts expire after six months of disuse. This happens often -- people sign up for an account and then soon stop using it. For example because they think they need one to use the MSN Messenger IM system, or because they're using it temporarily as a throwaway address (to give to vendors they don't trust).

Once a Hotmail account expires, mail sent to it will be rejected, normally with 550 Requested action not taken: mailbox unavailable. After a further 6 months (i.e. one year of disuse), the mailbox may be treated as a spamtrap. This means that email sent to old Hotmail addresses may be used as samples to help train spam filters for Hotmail, MSN, FrontBridge, the Outlook Junk filter, etc.

What does this mean for legitimate marketers? It's now more important than ever to detect and eliminate bounces from your lists. If a receiving mail system consistently tells you that an address is bad, remove that entry from your lists. If you don't, your IP range can be blacklisted and/or your message content will seem more "spammy." Of course, this means that your messages are more likely to end up not being delivered to your users.

It used to be simply bad manners for a sender to continually send mail to nonexistant addresses, but now it's actually self-destructive.